"Whilst it’s encouraging that we saw growth in the last three months of the year, this was preceded by property price falls for six consecutive months between April and September."
- Kim Kinnaird - Halifax
Halifax has released its latest figures showing that the UK housing market saw further signs of stability at the end of the year. Average UK house prices climbed by 1.1% during December - with the price of a typical home costing £287,105, just over £3,000 more than the previous month.
Property prices saw growth of +1.7% overall in 2023. However, the lender is predicting that this could go into reverse over the course of 2024, with its latest estimates suggesting that House prices are set to fall by between -2% and -4% this year.
Nations and regions' house prices
Northern Ireland continues to be the strongest performing nation or region in the UK, with house prices increasing by +4.1% annually. Properties in Northern Ireland now cost on average £192,153, which is £7,595 higher than the same time in December 2022
Scotland’s average house price also recorded growth, with the average property in the nation now £205,170, +2.6% higher or £5,277 in cash terms on an annual basis. North West (+0.3%), and Yorkshire and Humber (+0.1%) saw modest house price increases over the last year.
The South East fell the most during 2023, when compared to other UK regions, with homes selling for an average of £376,804 (-4.5%), a drop of £17,755.
Unsurprisingly, London retains the top spot for the highest average house price across all the regions, at
£528,798, albeit prices in the capital have declined by -2.3% on an annual basis.
Kim Kinnaird, Director, Halifax Mortgages, said: “In December, the cost of an average UK home rose for the third month in a row to £287,105, up +1.1% or £3,066, in November, reaching the highest level since March 2023.
“The housing market beat expectations in 2023 and grew by +1.7% on an annual basis. The average property price is now £4,800 higher than it was in December 2022. Whilst it’s encouraging that we saw growth in the last three months of the year, this was preceded by property price falls for six consecutive months between April and September. The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand.
"That said, with mortgage rates continuing to ease, we may see an increase in confidence from buyers over the coming months.
“Across all the UK regions, Northern Ireland recorded the strongest house price growth in 2023, properties here increased by +4.1% to £192,153. Scotland saw property prices increase by +2.6% to £205,170. At the other end of the scale, the South East fell most sharply, houses here now average £376,804 (-4.5%), a drop of –£17,755.
“As we move through 2024, the UK property market will continue to reflect the wider economic uncertainty and buyers and sellers are likely to be naturally cautious when considering making a move. While wage growth is now above inflation, helping to ease cost of living pressures for some and improving housing affordability, interest rates are likely to remain elevated for as long as inflation remains markedly above the Bank of England’s target.
"Our latest forecast suggests house prices could fall between -2% and -4% during the coming year, although, as with recent years, forecast uncertainty remains high given the current economic climate.”
Nathan Emerson CEO at Propertymark comments: “It is positive to see that house prices have gone up gradually month on month and also year on year, especially as borrowing costs are being affected by higher interest rates on mortgage affordability.
"Before 2023 ended, the Bank of England's decision to maintain interest rates should be providing further confidence to buyers looking to make their next or first home move in 2024. We would now hope that the Bank of England gradually starts slashing interest rates in order to further stimulate growth in the housing market."
Tom Bill, head of UK residential research at Knight Frank, said: “Annual house price growth has returned to positive territory as the economic convulsions of the last 18 months dissipate. The landscape changed at the end of last year as inflation dropped below 4%, which has put marked downward pressure on mortgage rates and means housing transactions will keep rising from a low base.
"There is likely to be a seasonal bounce in activity this spring, particularly after the Prime Minister hinted this week that the election will happen in the second half of 2024.”
Matt Thompson, head of sales at Chestertons, says: “December tends to be a quieter time of year in terms of property transactions but, last month, buyers have been more motivated to continue their search. Pent-up demand caused by last year’s economic uncertainty has been a key reason for this spike in buyer activity and indicates that 2024 will see a rather active property market.”
Karen Noye, mortgage expert at Quilter, says: “Figures from Halifax this morning reveal house prices saw a monthly uptick of 1.1% at the end of 2023, the third consecutive monthly increase, resulting in a 1.7% increase year on year. House prices consistently defied expectations that they would plummet throughout 2023, and this uptick highlights just how resilient the housing market has been over the last year despite the volatility it has faced."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The housing market saw a remarkably strong finish to the year, as buyer and seller confidence was boosted by three consecutive interest rate holds and the growing belief that the next move in rates will be downwards.
“Increased competitiveness among lenders leads to lower mortgage rates and we find ourselves in the midst of a price war. With HSBC launching the headline-grabbing 3.94 per cent five-year fix and reductions from Halifax, NatWest, TSB and other lenders, the gloves really are off.
“With 2023 being a disappointing year in terms of amount of business done, lenders are keen to get this year off to a cracking start. Increased competition, rates aside, may also lead to lenders broadening criteria to attract business with longer mortgage terms or greater flexibility to allow certain variable incomes. It is great news for borrowers who have struggled with affordability over the past few months as they may now be able to achieve their target loan amount where they couldn’t before.
"Although those remortgaging this year will still see an increase in their payments, the pain will not be as bad as it could have been. It remains important to seek advice from a whole-of-market broker and plan as far ahead as possible."
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "Although reflecting activity over the past few months, the Halifax survey has enjoyed a deserved reputation as a bellwether of housing market health.
"Prices are continuing their albeit modest upward trajectory despite the twin headwinds of inflation and interest rates. Bearing in mind too, these figures don’t include around a third of buyers who are not dependent on mortgages.
"Shortage of stock and wage growth exceeding the cost of living continue to support property prices.
"Looking forward, confidence to take on debt is improving with average mortgage rates now at their lowest for several months and the prospect of further encouragement for buyers in the Budget only partly tempered by growing election talk."